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Sunday, September 17, 2017

EUR/USD suffered under pressure from the US dollar and as the German elections near. Inflation data and PMIs stand out now.

European data continued its upbeat trend, with employment rising by 0.4%, better than expected. However, the recovery of the US dollar great for the euro. A combination of political and geopolitical stability, as well as short-covering all, boosted the greenback. After failing to push down the euro last week, Mario Draghi will sure be smiling now.

CPI (final): Monday, 9:00. The initial read of inflation for August showed prices rising at a higher level of.5% y/y while core CPI advanced by 1.2%, holding steady. The numbers will likely be confirmed in the final read.

Bundesbank Monthly Report: Monday, 10:00. The Bundesbank, Germany’s central bank, publishes a monthly overview of the economy. This will feed into the election campaign. An upbeat assessment will support Chancellor Angela Merkel.

Current Account: Tuesday, 8:00. The current account surplus that the euro-zone enjoys can be attributed to German exports. This keeps the euro bid. The surplus reached 21.2 billion in June. We now get the figures for July. A slightly wider surplus of 22.3 billion is predicted.

German ZEW Economic Sentiment: Tuesday, 9:00. The early report by ZEW provides a quick insight into the mood in German businesses. In August, the number declined to 10 points, lower than expected. It could rise now thanks to expectations for Merkel to win the elections. A score of 22.3 billion is projected.

German PPI: Wednesday, 6:00. Producer prices advanced by 0.2% in July. PPI has fluctuated quite a bit, but generally, provides another view on inflation in the pipeline. A rise of 0.1% is forecast.

ECB Economic Bulletin: Thursday, 8:00. This monthly report by the European Central Bank provides insight on how they see the economic situation and price development. It is a more detailed report than the statement released after the rate decision.

Consumer Confidence: Thursday, 16:00. This is an official report by the ECB. After a series of improvements, the indicator could not make it to positive ground and still implies a dose of pessimism. It stood at -2 points in the past two months. A repeat of the same score is on the cards.

Flash PMIs: Friday: 7:00 for France, 7:30 for Germany and 8:00 for the euro-zone. These forward-looking purchasing managers’ indices by Markit tend to move markets. The French manufacturing PMI stood at 55.8 points in August. A score of 55.6 is expected for September. Services lagged with 54.9 and 54.8 is predicted now. In Germany, manufacturing looks even better with 59.3 and 59 is estimated now. Services are at 53.5 and a small rise to 53.8 is predicted. The euro-zone manufacturing PMI was 57.4 and 57.2 is forecast now. Services stood at 54.7 and 54.8 is estimated. Any score above 50 reflects expansion.

Euro/dollar was unable to hold the higher ground above 1.20 and dropped to support at 1.1870.

While the economic situation in Europe continues looking good, things in the US have improved as well: this includes a better political environment, hopes for a tax reform and renewed optimism about a rate hike from the Fed. After the pair corrected, it could trade around the same levels before resuming the uptrend.